19Jun13

Orders top $100 billion as Ryanair gives Boeing a boost

Orders at the Paris Airshow surpassed $100 billion on Wednesday, as
planemakers Boeing and Airbus cashed in on demand for fuel-efficient jets and
growth in both budget carriers and emerging markets.

Ryanair, Europe's biggest low-cost airline, finalized an order for 175 Boeing
737-800 aircraft worth around $15.6 billion at list prices on day three of the
aerospace industry's showcase event, the largest single order ever placed by a
European airline with the U.S. group.

Ryanair Chief Executive Michael O'Leary said he was also working on an order
for 200 or more of Boeing's next-generation 737 MAX planes that could be
concluded this year, potentially worth around $20 billion at list prices.

Not to be overshadowed, Airbus sealed a long-awaited order for 25 of its
lightweight, wide-body A350 planes from Air France-KLM worth $7.2 billion at list
prices, as previously reported by Reuters.

It also firmed up a deal worth $8.6 billion for 30 more A350-900s from Singapore
Airlines, taking the total on order from the carrier to 70.

The A350, which made its maiden flight on Friday, is Airbus' answer to Boeing's
popular carbon-composite 787 Dreamliner, and the battle between the two
models has been a key feature of the Paris show as the planemakers jostle to
meet soaring demand for air travel in emerging markets, especially Asia and the
Middle East.

"This show is about wide-bodies," said Kelly Ortberg, president of Rockwell
Collins, which supplies major systems to the 787 and A350. "And really good
news for wide-bodies."

Boeing bagged nearly $30 billion in orders as it launched the 787-10 on Tuesday,
a stretched variant of its high-tech Dreamliner.

Wednesday's dealmaking took the order count for the show so far to more than
$100 billion at list prices, although many of the agreements were provisional and
most sizable deals are struck at a significant discount.

Nonetheless, the activity confirmed plenty of work for civil aircraft manufacturers
for years to come.

Ahead of Schedule

Ryanair's O'Leary said the planned purchase of Boeing 737 MAX jets later this
year would be "all growth" and not replacements for aircraft currently in its
all-Boeing fleet.

If the order was not at least 200 planes, "it wouldn't be worth doing," he added, in
typically forthright style.

But some analysts took this with a pinch of salt. While Ryanair could afford to use
a large MAX order to expand, it is not under pressure to buy next-generation jets,
said Espirito Santo analyst Gerald Khoo, and will likely wait until prices are at a
cyclical bottom to get the best deal.

The 737 MAX is Boeing's answer to the Airbus A320neo, a new version of the
European planemaker's best-selling model.

Boeing earlier on Wednesday moved forward by six months the date of the
plane's planned entry into service, saying it would be in the third quarter of 2017,
almost two years after the A320neo.

O'Leary said a senior team from Boeing and Ryanair was working on a 737 MAX
order and that the airline was giving serious consideration to rival Airbus'
A320neo jet, though Ryanair has not purchased any Airbus jets and the European
planemaker has repeatedly dampened the idea.

"We're hopeful that we can reach agreement on price of a MAX order sometime
before the end of the year," O'Leary said, adding that the 737 MAX offered better
fuel economy than the A320neo and room for nine extra seats.

O'Leary said he was interested in launching a transatlantic, low-cost airline, but
that there was no opportunity for a significantly sized operation until Boeing and
Airbus had worked through their delivery backlog for wide-body jets.

Airbus also clinched an order for six A330-300 aircraft and commitments to buy
four A350-900s from SriLankan Airlines on Wednesday in a deal worth $2.6
billion at list prices.

[Source: By Alwyn Scott and Maria Sheahan, Reuters, Paris, 19Jun13]

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